"The IRS rate only applies to how much of the expense is used for your tax calculations"?

Does that mean that anything beyond 50 cents a mile is taxed?
Do staff have to count that extra part as wages? If so does this mean we have to pay employer's tax on top and it is not a regular business expense?
Is 50 cents a mile tax free?

Mileage Reimbursement

For those individuals who plan to claim mileage for medical or moving related travel, they should be aware that the new rate for 2010 is just 16.5 cents per mile, down from 24 cents per mile in 2009, 7.5 cents per mile less. This change is significant to me personally because my spouse and I elect to defer money into a Flexible Spending Account (FSA)

Are you sure about this? I thought that one could only be reimbursed the maximum of 50 cents per mile. The employee can choose actual costs over the allowance the IRS gives if they so choose. But the IRS only allows for .50 cents per mile. Anything higher than that is subject to tax. Correct?

This was taken from the IRS:
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Are you sure about this? I thought that one could only be reimbursed the maximum of 50 cents per mile. The employee can choose actual costs over the allowance the IRS gives if they so choose. But the IRS only allows for .50 cents per mile. Anything higher than that is subject to tax. Correct?

This was taken from the IRS:
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

If you have an accountable plan... meaning you turn in receipts, you can be reimbursed for the actual costs, or the standard mileage rate.

If you want to pay someone $5.00 per mile driven, go ahead -- but it is subject to taxes (yes). Sometimes, people would rather give an allowance of say $300 -- and that is also taxable, and the employee can figure out the details if he is able to itemize his deductions. Otherwise, it's taxable.

Small Business CPA
"A tax loophole is something that benefits the other guy. If it benefits you, it's tax reform."